![]() | |
![]() | |
![]() |
Investing Information |
|
![]() |
Investing for Retirement - Not an All or Nothing Play
In 1519, Hernando Cortes, beached on the shores of unexplored Mexico, made a fateful decision: he would burn the ships he and his men arrived in and attempt to overthrow Montezuma and the mighty Aztec empire. The decision was risky. The Aztecs were meant to possess large numbers of brave warriors while Cortes had only a handful of men. If Cortes had the slightest setback there would be no escape. On the other hand, Cortes had no choice. The powerful Governor of Cuba wanted his head. Cortes had defied the Governor time and time again and his best option for getting out of the situation was to win favor with King Charles by conquering a civilization rich in gold and other treasures. Since Cortes' men might get a little antsy if the going got rough and decide they would prefer going home, Cortes decided it would be best to completely align their incentives with his. He did this by burning the ships. Anything but success would now equal death for Cortes and all of his men. Thus began the famous march from Vera Cruz to Tenochtitlan. Your retirement is not the conquest of New Spain. All or nothing plays, though they can be wildly successful and can lead to conquistador like splendor, are not the kinds of risks you should be taking with your future. Putting all of your savings into a single speculative venture should be reserved for situations when there is truly nothing to lose. When investing for the future you should take a much longer view of things. You should understand that the economy undergoes boom and bust cycles, fads come and go and sometimes you just plain get unlucky. To combat the vicissitudes of fortune you must diversify your investment holdings. A lot of people go about their savings in a very simple way: they have their employer take money out of their paycheck and put it in a 401(k) plan. This is a good, tax advantaged way to save. The problem often comes, however, when the employee falls prey to the employer's siren song of re-investing in the company. Perhaps the company has been doing well lately and the employee is bullish on the future success of the company. He or she then goes ahead and contributes 100% of his 401(k) to purchasing company stock. That is a potentially disastrous decision. Most people's livelihoods are not well diversified. For the most part people rely on their employer for their future well being. Your employer supplies your paycheck, you are counting on your employer for wage increases and you may also be expecting a nice little pension when you retire. That is already a lot of eggs in one basket. Companies fail suddenly, layoffs occur and you do not always have the meteoric rise in your career that you might hope for. To subject your savings to the fortunes of the company that you already are so dependent upon is something you should do only after careful consideration of all the alternatives. It might be the right thing to do, but you are taking on a lot of risk in doing it. So if you aren't doubling down on your company's future, what should you be doing with your retirement savings? The answer obviously depends on where you are in your life. When you are younger you can take a few more risks in life. Your portfolio should be weighted towards slightly riskier assets rather than stable, income producing assets. As you get older the mix should change until you reach a point in life where, finally, your portfolio consists of mostly income producing assets. This is not carte blanche to go on a wild stock-picking adventure with your retirement money while you are young. You should leave that to the pros. There are people who dedicate their lives to learning the art of investing. These people study The Intelligent Investor like it was a bible. They pore over annual reports and study where Warren Buffet went to lunch that day in an attempt to glean a precious new piece of information. If this profile does not sound like you, stay away from stock-picking. Even the pros have a hard time beating the market and they have advantages that you can never hope to have on your side. Sure you can gamble a little bit of money on that hot stock your cousin told you about, but think of it the same way as putting a pile of money on red at the roulette table: odds are you are going to lose your money, but, hell, you might get lucky and win. For proper long term planning, concentrate on finding a mutual fund that has a nice track record, low fees and a good rating from a reputable publication like Morningstar. If you want to make a bet on the growth of America, buy an S&P 500 index fund. For a little extra diversity, maybe research an international or emerging markets fund and put some money there. As long as you stay away from French companies, you should be fine. Seneca Spade learned about the wonders of diversification after losing way too much money on a hand of blackjack. He is an investment specialist and contibuting editor for whatbubble.com. If you would like to post your own comments, have any financial questions answered by an expert for free, or would like to read more on this subject please visit http://www.whatbubble.com, If you wish to re-publish this article, we request you retain all links and copy including this bio.
MORE RESOURCES: Where Are Stocks, Bonds and Crypto Headed Next? Five Investors Look Into Crystal Ball The Wall Street Journal Nasdaq Bear Market: Cathie Wood Is Still Bullish on These 3 Beaten-Down Growth Stocks The Motley Fool Tax-Aware Investing: What Is It and How Do I Do It? | Chase Chase News & Stories Investing in Method Andreessen Horowitz Committee affirms anti-ESG, anti-China pension investing bills Indiana Capital Chronicle Investing When Your Time Horizon Is Short The New York Times The Best Stocks to Invest $20,000 in Right Now The Motley Fool Investing in Voldex Andreessen Horowitz What's Going on With REITs? An Investors Guide The Motley Fool How ‘Permabears’ Make Money by Selling Fear Investing.com Investing Opportunities Emerge in Latin America Morgan Stanley Democratic lawmakers create sustainable investment caucus to ... Pensions & Investments A conservation legacy is possible by investing now Santa Fe New Mexican How to Invest in Stocks - Buy Side from WSJ The Wall Street Journal Why You Should Invest: Top 10 Reasons AllBusiness.com 2 Dividend Stocks to Help You Beat the Market in 2023 Investing.com The 10 golden rules of investing Yahoo Finance Investing in Cygnvs Andreessen Horowitz Investing, thriving with automation - free webinar registration Today's Medical Developments Ultimate Guide on Investing for Beginners Entrepreneur The 5 Most Dangerous Times to Trade Investing.com Your Investment Lost Money Last Year. So Why the Big Tax Bill? The New York Times Investing in PLAI Labs Andreessen Horowitz Investing $100,000 in These Stocks in 2023 Could Get You $1 ... The Motley Fool The Art of Contrarian Investing Investing.com 80% of Warren Buffett's Portfolio Is Invested in These 7 Stocks The Motley Fool Investing Action Plan — January Wrap: Apple, OPEC, Exxon And ... Investor's Business Daily Investing in REITs vs. Direct Real Estate Morningstar Investing in 2023: A Year to Be Patient and Selective Morgan Stanley 5 Investing Alternatives for Conservative Investors Kiplinger's Personal Finance 8 Best Small-Cap Value Stocks to Buy | Investing | U.S. News U.S News & World Report Money Soft Landing Scenario: Possibility or Fed Myth? Investing.com Spend Your Time Working or Investing? » The Stacking Benjamins ... The Stacking Benjamins Podcast U.S. Warns Banks to Watch for Russian Oligarchs Investing in ... The Wall Street Journal 1 Smart Way to Invest Your Tax Refund You Haven't Thought Of The Motley Fool Rosie on the House: Investing in a whole home energy audit Arizona Daily Star Rewind 2022: My Investing Journey Seeking Alpha Is Intel's Downfall Good News for AMD and Nvidia Investors? The Motley Fool Personalized Investing Portfolios: Unlock the Greatest Potential Kiplinger's Personal Finance Calm Before the Rally? Investing.com Long-Term Investments Require a New Approach Kiplinger's Personal Finance Coffee Steaming Again After 4 Months in the Cold Investing.com 3 Reasons Investors Should Zoom In on GoPro Stock The Motley Fool The Week in Impact Investing: Integrity ImpactAlpha 1 Undervalued Stock That Smart Investors Are Buying In 2023 The Motley Fool Bohanon and Horowitz: When investing, balance opinions of ... Indianapolis Business Journal |
![]() |
![]() |
![]() |
RELATED ARTICLES
Super Rules, OK? Do you rule your superannuation or does it rule you?It's easy to fall for some myths about your super unless you do some clear thinking about who is in charge. Virtually all Australian employees now have a superannuation account, many have several, even more than they know about. 401(k) Plans I've been in and interested in the stock market so long (one year shy of forty years) I can remember when the mutual fund pages in my home town paper were just one page! Now it looks like there are more mutual funds then there are stocks listed on the New York stock exchange.I wonder how many billions of investor dollars are supporting these funds. Using Divergences to Keep Out of Bad Trades The American Football season just came to an end with my team getting close to the championship but falling short again. I am a big fan of the Indianapolis Colts and we keep having a groundhog day season year after year but it is still fun to watch. Investing and the Fear of Regret and Greed People tend to feel sorrow and grief after having made an error in judgement.Investors deciding whether to sell or buy a security are typically emotionally affected by whether the security was bought or sold for more or less than the current price. Investing and Understanding What You Buy "There is nothing more frightful than ignorance in action!"Johann Wolfgang von Goethe (1749 - 1832)I don't really know how cars actually work. Not really! I know how to drive them, but if you asked me how they work, I would not really know how to definitely explain it. What is an Investor Ready Business Plan A Business Plan, as all good entrepreneurs starting out in life should know is the foundation, or rather a springboard, towards the establishment and growth of a new business. A business plan is an essential tool for companies raising capital - and your business plan needs to be Investor Ready. Investing in Car Dealerships: Doing Your Homework This article attempts to help give the investor a broader basis upon which to decide whether a dealership merits their time, money and attention.Interviewing Factories and Financial InstitutionsLenders have an affirmative duty not to promiscuously disclose the financial condition of their debtors. Waiting 20 Years Can Cost You Millions - Dont Wait Start Today Many Young people live for Today. They really don't fully understand the power of compound interest. Seven Investment Terms Everyone Should Know For those who have never given their financial future a second thought, the term "Financial Planning" could be a scary one. Investments can be a smart way to invest money for your future, but it can be confusing for those who have no experience in the financial business. What My Horse Had For Breakfast Let's see, he had some oats, fresh alfalfa and his vitamins. I know from the mixture that is great food and he will win the seventh race this afternoon. How Do I Start Investing Online and What Are Some Basic Tips? If you are new to investing online, don't put your entire life savings into an online account. Start with a smaller sum, which will be easier to handle and keep track of. The Past Does Not Equal The Future: Mutual Fund Returns! A way that investors get ripped off and in a sense rip themselves off is based on the culture of performance in the mutual fund industry. If you stop and think about it there is absolutely no reason that the past has to equal the future. How To Find An Investment Advisor Do you think you need an Investment Advisor? Hold on before you answer because this is sort of a trick question. Also, I am definitely biased because I am an Investment Advisor. Critical Investors Business Daily Responsibilities - If not Followed Could Cost You Millions! When thinking about the investors business daily responsibilities in today’s market environment, the best remedy for this situation is for you to get more involved in your own investing decisions.The problem is that most individual investors do not have the knowledge, resources, or time to spend doing their own research, stock selection, execution, and position management. Asset Allocation: Critical to Your Investment Success Asset allocation is a critical component of investing success. Both research and academic studies show asset allocation to be single most significant factor in determining your financial goals. Annuity Investment Guide While there is not a lack of information on annuities, there certainly is a lack of good information. In an age full of information, we are constantly bombarded with irrelevant data. The Perfect Economy? The U.S. Stock Market Retirement Investment Plan For a successful retirement investment plan to work in the stock market, some 'reasonably sure' assumptions would have to be made:The retirement investment plan must take into consideration the one prevailing constant in any stock market security - risk and uncertainty. Understanding that risk and uncertainty are the key factors that propels the return on investment in the stock market far beyond the returns of Passbook Savings Accounts, CD's or Bonds are a start. Out-Of-State Investors Check List of Questions The following lists of questions are suggested questions to ask before you plan to purchase residential real estate outside of your neighborhood.It's probably best to speak with at least three licensed real estate sales professionals and three property managers in the area. Day Traders and Swing Traders and Options? Maybe! Typical day traders and swing traders look for stocks with quick,short term movements, and are not in the business of holdingpositions overnight let alone a week or two. So the use ofoptions has not usually been a component of their tradingstrategies. ![]() |
home | site map |
© 2006 |